Virtus Investment Partners' (NYSE:VRTS) Dividend Will Be Increased To $2.40

The board of Virtus Investment Partners, Inc. (NYSE:VRTS) has announced that it will be paying its dividend of $2.40 on the 14th of November, an increased payment from last year's comparable dividend. This takes the dividend yield to 4.6%, which shareholders will be pleased with.

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Virtus Investment Partners' Projected Earnings Seem Likely To Cover Future Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Virtus Investment Partners' dividend was only 43% of earnings, however it was paying out 193% of free cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

Over the next year, EPS could expand by 25.6% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 40%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Virtus Investment Partners

Virtus Investment Partners Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $1.80 in 2015 to the most recent total annual payment of $9.00. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Virtus Investment Partners has grown earnings per share at 26% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Virtus Investment Partners that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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